International Arbitration 2020

Last Updated September 16, 2020

Mauritius

Law and Practice

Authors



Benoit Chambers consists of a team of dedicated professionals known for handling many of the largest and most complex cases in Mauritius. Benoit Chambers enjoys a strong reputation in the business community for its commercial practice, particularly in respect of corporate law matters. The practice offers legal services to a large pool of local and foreign clients, mostly corporate, with its expertise enabling it to advise in respect of an increasingly large number of complex transactions. Benoit Chambers provides advocacy, particularly in relation to disputes of a commercial nature, and members of the practice appear before every jurisdiction in Mauritius as well as the Judicial Committee of the Privy Council in London. They are also active in domestic and international arbitrations, predominantly involving commercial disputes.

There has been a significant increase in the use of international arbitration as a method of resolving disputes in Mauritius in recent years. However, in disputes involving purely domestic parties, there is a tendency to resort to domestic arbitration, although litigation is still more favoured.

International disputes arise mainly in the context of investments made abroad by companies incorporated in Mauritius, especially where the investors and operating companies are based in different jurisdictions and choose Mauritius as a neutral arbitration seat with an established legislative framework. A number of disputes also arise from credit facility agreements involving a consortium of international banks, the termination of shareholders' agreements and the duty of care to be exercised by fund administrators in the discharge of their functions.

In the context of disputes in the financial sector, an increasing number of international arbitration and enforcement proceedings under the International Arbitration Act 2008 (IAA) are before the Supreme Court of Mauritius.

In mid-2019, the Supreme Court of Mauritius delivered judgment in the case of State Trading Corporation v Betamax [2019 SCJ 154], wherein the Court set aside an arbitral award on the ground of public policy. In the judgment, which is the first of its kind since the IAA came into force, the Supreme Court found that, while setting aside an award in Mauritius, courts need to have regard to the domestic public policy of the state rather than international public policy of that state, and a contract entered into in violation of the public procurement laws of Mauritius is contrary to public policy, so the courts cannot give effect to such an award through recognition and enforcement. This judgment is currently under appeal before the Judicial Committee of the Privy Council.

While the COVID-19 pandemic has not affected the use of international arbitration in Mauritius as such, arbitration proceedings that have Mauritius as their seat or venue have experienced delays due to the closure of the Mauritian border since March 2020. Nevertheless, by agreement, some hearings have been conducted through video-conferencing.

As indicated in 1.1 Prevalence of Arbitration, significant international arbitration is currently occurring in relation to the following:

  • shareholder disputes concerning investments (mostly in India, China or Africa) made by or through Mauritian companies holding a Global Business Licence;
  • disputes arising out of the termination of shareholders' agreement in relation to shares held in a financial institution; and
  • the duty of care to be exercised by fund administrators in the discharge of their functions.

LCIA and SIAC are the arbitral institutions most commonly used for international arbitration because parties are of the view that they offer a combination of the best features, such as maximum flexibility to agree on procedural matters, speed and efficiency in the appointment of arbitrators, means of reducing delays and counteracting delaying tactics, costs computed without regard to the amounts in dispute, and best result on service delivered.

International arbitration in Mauritius is governed by the IAA, which is based largely on the UNCITRAL Model Law. Section 2B of the IAA provides that, in applying and interpreting it and in developing the law applicable to international arbitration in Mauritius, regard shall be had to, inter alia, the origin of the Amended Model Law, the need to promote uniformity in the application of the Model Law, the general principles on which the Amended Model Law is based, international materials relating to the Amended Model Law, and its interpretation, including relevant reports of UNCITRAL, relevant reports and analytical commentaries of the UNCITRAL Secretariat, relevant case law from other Model Law jurisdictions (including the case law reported by UNCITRAL in its CLOUT database and textbooks), articles and doctrinal commentaries on the Amended Model Law.

There have been no significant changes to the national arbitration law in the past year.

In relation to an “international arbitration” within the meaning of the IAA, section 4 of the IAA provides that the arbitration agreement must be in the form of an arbitration clause in a contract or other legal instrument, or in the form of a separate agreement, and shall be in writing.

With respect to international arbitration, there is no specific provision in the IAA that deals with the question of arbitrability, except that sections 39(b)(i) and (ii) provide that the subject matter of the dispute must be capable of being settled by arbitration under Mauritius law, and the award should not be in conflict with the public policy of Mauritius.

In the case of State Trading Corporation v Betamax [2019], the Supreme Court of Mauritius qualified the issue of public policy and found that the courts need to have regard to the domestic public policy of the Mauritius rather than the international public policy of Mauritius. This judgment is currently under appeal before the Judicial Committee of the Privy Council.

Since the inception of the IAA, there has not been any court decision on which subject matters are arbitrable, but it can be said that any matter that is not capable of being litigated cannot equally be a subject matter of arbitration. Nevertheless, generally, matters involving public order and the status of the person cannot be subject to arbitration.

Section 5(2) of the IAA provides that the Supreme Court must refer the parties to arbitration unless a party shows, on a prima facie basis, that there is a very strong probability that the arbitration agreement may be null and void, inoperative or incapable of being performed, in which case it shall itself proceed finally to determine whether the arbitration agreement is null and void, inoperative or incapable of being performed.

The position is explained in UBS AG v The Mauritius Commercial Bank Ltd [2016 SCJ 43], in which the Court held the following: “The principle is that the court must refer the matter to arbitration, that is, it must give the arbitrator the opportunity to decide the jurisdictional issue first, unless the party who is objecting to the matter being referred to arbitration discharges the burden, which has been placed squarely on him, by showing that there is a very strong probability of the arbitration agreement being null and void, inoperative or incapable of being performed, in which case the Court will then have to proceed to finally determine whether the arbitration agreement is in fact so. The burden put in this way means that the hurdle has been set high since the objecting party has to satisfy, on a prima facie basis, the very high threshold imposed by the 'very strong probability' standard.”

Section 20(2) of the IAA recognises the principle of the separability of the arbitration clause.

Section 12(2) of the IAA provides that the parties are free to agree on the procedure for appointing the arbitral tribunal.

Section 12(4) of the IAA provides that, if the chosen method fails, any party to arbitration – including in cases of multi-party arbitrations – may request the PCA to take any necessary measures, unless the agreement on the appointment procedure provides other means for securing the appointment.

The IAA does not provide for the intervention of the Mauritius courts in the selection of arbitrators. Section 2A of the IAA expressly provides that no court shall intervene in matters governed by the IAA, except where so provided in the IAA.

As stated under 4.2 Default Procedures, a party may make a request to the PCA, which may give directions as to the making of any necessary appointments, direct that the arbitral tribunal be constituted by such appointments, revoke any appointment already made, appoint or reappoint any or all of the arbitrators, and designate any arbitrator as the presiding arbitrator (section 12(6) of the IAA).

Section 13(3) of the IAA provides that an arbitrator may be challenged only if there are justifiable doubts regarding his or her impartiality or independence, or if he or she does not possess qualifications agreed to by the parties.

Section 14 of the IAA provides that, unless the parties have agreed on a procedure for challenging an arbitrator, a party who intends to challenge an arbitrator must send a written statement of the reasons for the challenge to the arbitral tribunal within 15 days of becoming aware of the constitution of the arbitral tribunal or of any circumstance referred to in section 13(3); unless the challenged arbitrator withdraws from his or her office or the other party agrees to the challenge, the arbitral tribunal will decide on the challenge.

Section 16 of the IAA provides that the appointment of a substitute arbitrator should be in accordance with the procedure that applied to the appointment of the arbitrator being replaced.

Sections 13(1) and (2) of the IAA provide that an arbitrator must disclose any circumstance that is likely to give rise to justifiable doubts as to his or her impartiality or independence from the time that he or she is approached in connection with the possible appointment, and throughout the arbitral proceedings.

The principal arbitration institutions based in Mauritius are the MARC, MIAC and PCA, which have similar rules as under the IAA with respect to the duty of arbitrators to disclose potential conflicts of interest.

Please see 3.2 Arbitrability.

Section 20 of the IAA provides that an arbitral tribunal may rule on its own jurisdiction, including on any objection with respect to the existence or validity of the arbitration agreement.

The Supreme Court can address issues of the jurisdiction of an arbitral tribunal in two circumstances.

Pursuant to section 39 of the IAA, upon an application made by a party, the Court can set aside an award made by the arbitral tribunal for reasons set out therein, including where the Court is satisfied that the arbitration agreement is not valid, that the award deals with a dispute not contemplated by – or not falling within the terms of – the submission to arbitration or contains a decision on a matter beyond the scope of the submission to arbitration, or that the subject matter of the dispute is not capable of settlement by arbitration under Mauritius law.

Furthermore, section 40 of the IAA provides that the New York Convention applies to the recognition and enforcement of awards rendered under the IAA. Pursuant to Article V of the New York Convention, recognition and enforcement of the award may be refused on similar grounds as provided in section 39 of the IAA.

To date there has not been any decision whereby the Supreme Court of Mauritius has reviewed negative rulings on jurisdiction by arbitral tribunals.

Parties have the right to go to court to challenge the jurisdiction of the arbitral tribunal after an award has been rendered – see 3.3 National Courts' Approach. The court will give the arbitral tribunal the opportunity to determine its own jurisdiction first.

The IAA does not provide for a standard of review and there is currently no case law of the Mauritius Supreme Court in that respect.

Section 5 of the IAA provides that the court should automatically transfer the action to the Supreme Court when a party contends that the action which is brought before a court is the subject of an arbitration agreement, provided that said party makes such request no later than when submitting its first statement on the substance of the dispute. The Supreme Court then decides on a prima facie basis if there is a very strong probability that the arbitration agreement may be null and void.

The approach taken by the Supreme Court in a number of cases has been to stay the court proceedings where it is not satisfied on a prima facie basis that there is a very strong probability that the arbitration agreement may be null and void.

The IAA does not provide for an arbitral tribunal to assume jurisdiction over any third parties.

Section 21 of the IAA provides that, unless agreed otherwise by the parties, the arbitral tribunal may grant interim relief measures for the following:

  • to maintain or restore the status quo pending determination of the dispute;
  • to take action that would prevent or avoid action that is likely to cause current or imminent harm or prejudice to the arbitral process itself;
  • to provide a means of preserving assets out of which a subsequent award may be satisfied;
  • to preserve evidence that may be relevant and material to the resolution of the dispute; or
  • to provide security for costs.

Section 22 of the IAA provides that, upon the application of a party, the Supreme Court shall enforce an interim measure granted by an arbitral tribunal.

Section 23 of the IAA further provides that the Supreme Court has the power to issue interim measures upon the application of a party, and shall exercise that power in such a manner as to support and not disrupt the existing or contemplated arbitration proceedings. Furthermore, the Court shall act only if or to the extent that the arbitral tribunal – and any arbitral or other institution or person vested by the parties with power in that regard – has no power or is unable for the time being to act effectively.

Section 21(1)(e) of the IAA provides that the arbitral tribunal may order security for costs.

The IAA does not expressly provide that the Supreme Court can order security for costs in relation to the arbitral proceedings. However, by virtue of its wide powers to grant interim measures under section 23 of the IAA, the Court is able to make an order for security for costs if the arbitral tribunal or institution is unable to do so at a given time (eg, before the constitution of the arbitral tribunal).

The IAA provides certain rules governing the procedure for arbitration in Mauritius.

Section 26 of the IAA provides the following, inter alia:

  • that the parties should be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal;
  • that every statement, document or other information supplied to the arbitral tribunal by a party should be communicated to all other parties; and
  • that any further statement, document or information received by the arbitral tribunal on which the arbitral tribunal may rely should also be communicated by the arbitral tribunal to all parties.

Section 24 of the IAA provides that every arbitral tribunal must treat the parties with equality and give them reasonable opportunity to present their case and adopt procedures that are suitable to the circumstances of the case, avoiding unnecessary delay and expense, so as to provide a fair and efficient means for the resolution of the dispute between the parties. Subject to the IAA, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, and may determine all procedural and evidential matters.

Section 31 of the IAA provides that, unless agreed otherwise by the parties, a party to arbitral proceedings may be represented in the arbitral proceedings by a law practitioner or another person chosen by the party, who does not need to be qualified to practise law in Mauritius or any other jurisdiction.

Section 24(3) of the IAA provides that, failing an agreement between the parties, the arbitral tribunal may determine all procedural and evidential matters, including whether any written statement of claim and defence is to be used, when these should be supplied and the extent to which such statements can later be amended, whether any document should be disclosed between – and produced by – the parties and at what stage, whether any question should be put to and answered by the parties, whether to apply rules of evidence, and whether and to what extent the arbitral tribunal should administer oaths or take affirmations from any witness for the purposes of examination before the arbitral tribunal.

The IAA does not provide for any specific rules of evidence to apply to arbitral proceedings seated in Mauritius. Please see 8.1 Collection and Submission of Evidence.

Section 29 of the IAA provides that the Supreme Court may issue a witness summons to compel the attendance of any person before an arbitral tribunal to give evidence or produce documents or other material, or may order any witness to submit to examination on oath before the arbitral tribunal or before an officer of the Court or any person for the use of the arbitral tribunal. The Supreme Court will do so in accordance with its rules on the taking of evidence. According to such rules, every person who is competent to give evidence is also compellable, and is not excluded by reason of being a party to the action (section 163 of the Courts Act).

The IAA makes no specific provision in relation to the confidentiality of arbitral proceedings. In practice, the requirement of confidentiality is provided in the arbitration agreement and/or the rules of the arbitral institution.

Section 36 of the IAA provides that an arbitral award must be made in writing and signed by the arbitrator or, in arbitral proceedings with more than one arbitrator, by the majority of all members of the arbitral tribunal or by the presiding arbitrator alone where there is no majority (unless otherwise agreed by the parties), provided that the reason for any omitted signature is stated.

An award must state the reasons on which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms.

An award must also state the date on which it was made.

Section 33 of the IAA provides that, unless agreed otherwise by the parties, the arbitral tribunal may order the payment of a sum of money, in any currency, and has the same powers as a court in Mauritius to order a party to do or refrain from doing anything, to order specific performance of a contract and to order the rectification, setting aside or cancellation of a deed or other document, and may award simple or compound interest for such period and at such rate as it considers necessary.

The parties are entitled to recover interest and legal costs, pursuant to sections 33(1)(d) and (2) of the IAA.

The general principles are that costs should follow the event, except where it appears to the arbitral tribunal that this rule should not apply or not apply fully in the circumstances of the case, and that the successful party should recover a reasonable amount that reflects the actual costs of the arbitration and not only a nominal amount (see section 33(2)(a) of the IAA).

Section 39 of the IAA provides that a party may apply to the Supreme Court to set aside an arbitral award, within three months of receiving the award. The grounds for setting aside an arbitral award are largely similar to the ones provided in the New York Convention, on the basis of which a court can refuse to recognise and enforce an award.

Parties may also provide in the arbitration agreement that, notwithstanding section 39 of the IAA, any party can appeal to the Supreme Court on any question of Mauritius law arising out of an award with leave of the Court (see paragraph 2 of the First Schedule to the IAA).

Parties cannot agree to exclude the application of section 39 of the IAA, nor to expand the scope of the optional appeal under the First Schedule to the IAA.

An appeal (if provided for in the arbitration clause) will only concern a question of Mauritius law if it includes an error of law that involves an incorrect interpretation of the applicable law but does not include any question as to whether (i) the award or any part of the award was supported by any evidence or any sufficient or substantial evidence, or (ii) the arbitral tribunal drew the correct factual inferences from the relevant primary facts (see paragraph 2(8) of the First Schedule to the IAA).

Mauritius is a party to the New York Convention, with no reservations.

In accordance with rule 15 of the Supreme Court (International Arbitration Claims) Rules 2013, an application for recognition and enforcement of an award must be made by way of a motion supported by written evidence in the form of an affidavit or witness statement. It must initially be made without notice to the respondent. Upon receipt of the application, the Chief Justice may issue a provisional order granting recognition of the award or authorising the enforcement of the award in the same manner as a judgment of the Court. Within 14 days of receiving the provisional order, the applicant must cause the application and the provisional order to be served on the respondent and on any additional party as may be ordered by the Chief Justice. Thereafter, a respondent may apply to set aside the provisional order within 14 days (or such other period as may be allowed by the Court if service must be effected outside the jurisdiction). The award will not be enforced until the end of the period given to the respondent in which to apply to set it aside, or until the disposal of such application made by the respondent.

The Supreme Court of Mauritius is inclined to give effect to the recognition and enforcement of an arbitral award, unless there are compelling reasons not to do so.

The Supreme Court has consistently adopted the approach of scrutinising the grounds put forward by an applicant for the setting aside of an arbitral award, with the pronouncement in Cruz City 1 Mauritius Holdings v Unitech Limited & Anor [2014] reflecting this rigid approach: “In our view, a respondent should not raise an objection to the recognition of a foreign award under Article V(2)(b) of the New York Convention injudiciously. Essentially, the respondent has to show with precision and clarity in what way and to what extent enforcement of the award would have an adverse bearing on a particular international public policy of this country. Not only must the nature of the flaw in the arbitration proceedings be unambiguously described but a specific public policy must be identified and established by the party relying on it.”

In State Trading Corporation v Betamax [2019], on the issue of public policy, the Supreme Court held that: “The breach of the legal provisions must be flagrant, actual and concrete. But it is not any legal breach which would suffice to set aside the enforcement of an award. The threshold is quite high; it should be the breach of a fundamental legal principle, a breach which disregards the essential and broadly recognised values which form part of the basis of the national legal order, and a departure from which will be incompatible with the State’s legal and economic system.” In that judgment, it was confirmed that the Act does not refer to international public policy but expressly provides that the arbitral award may be set aside where the Court finds that “the award is in conflict with the public policy of Mauritius.” It is clear therefore that the public policy is the domestic public policy of Mauritius.

While it is not possible under Mauritius law to initiate class-action proceedings before a court in Mauritius, the IAA does not preclude the possibility of class-action arbitration or group arbitration. To date, no recognition or enforcement of an arbitral award under a class-action arbitration or group arbitration has been sought in Mauritius, and the Supreme Court of Mauritius has not been called upon to deliver judgment or clarification in that regard. However, following the reasoning in the judgment of State Trading Corporation v Betamax [2019], the Supreme Court of Mauritius may refuse to grant recognition and enforcement of an award under a class-action arbitration or group arbitration on the ground that the award is in conflict with the public policy of Mauritius, viewed in the domestic Mauritian context.

Counsel and attorneys should abide by their respective Code of Ethics during arbitration proceedings carried out in Mauritius. However, there is no ethical code or other professional standards that apply to arbitrators in Mauritius. In that case, the ethical rules of the Arbitral Tribunal, if any, will apply.

Third-party litigation funding is permitted in Mauritius, although it is neither provided for nor prohibited by any legislation, nor otherwise regulated. Third-party litigation funding is not common, and has not been the subject of any judicial pronouncement.

Under the First Schedule to the Act, an arbitral tribunal with its seat in Mauritius can consolidate separate arbitral proceedings where the parties are licensed Global Business Companies. In all other cases, the First Schedule to the Act will only apply where the parties have so agreed by making express reference to that Schedule or to specific provisions. Consolidation of separate arbitral proceedings can be ordered under the First Schedule in the following circumstances:

  • where some common question of law or fact arises in all of the arbitral proceedings;
  • where the rights to relief claimed in all of the proceedings are in respect of, or arise out of, the same transaction or series of transactions; or
  • where for some other reason it is desirable to make the order or provisional order.

Regardless of whether it is domestic or foreign, a party can only be bound by an arbitration agreement if that party is privy to that arbitration agreement, and it will be bound by an award if it has been joined as a party to the arbitration proceedings. Likewise, decisions of the courts of Mauritius will only apply to a party, whether domestic or foreign, if it has been joined as a party to the court proceedings and duly summoned to attend court.

Benoit Chambers

Level 9, Orange Tower
Cybercity
Ebène
Mauritius

+230 403 6900

+230 403 6910

rp@bc.intnet.mu www.benoitchambers.com
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Law and Practice

Authors



Benoit Chambers consists of a team of dedicated professionals known for handling many of the largest and most complex cases in Mauritius. Benoit Chambers enjoys a strong reputation in the business community for its commercial practice, particularly in respect of corporate law matters. The practice offers legal services to a large pool of local and foreign clients, mostly corporate, with its expertise enabling it to advise in respect of an increasingly large number of complex transactions. Benoit Chambers provides advocacy, particularly in relation to disputes of a commercial nature, and members of the practice appear before every jurisdiction in Mauritius as well as the Judicial Committee of the Privy Council in London. They are also active in domestic and international arbitrations, predominantly involving commercial disputes.

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